Euro Stability Threatened by US Dollar Stablecoin Dominance: Europe’s Concerns Over US Stablecoins

Jakarta, Pintu News – The United States’ increasing support for dollar-backed stablecoins could threaten Europe’s financial stability and monetary sovereignty. The digital euro initiative by the European Central Bank (ECB) is an important step towards meeting this challenge.

Europe’s concerns over US stablecoins

Pierre Gramegna, Managing Director of the European Stability Mechanism (ESM), emphasized the importance of accelerating the digital euro project to preserve Europe’s monetary sovereignty and financial stability. He noted that the success of US dollar-backed stablecoins could reduce the euro’s influence on the global stage.

This is mainly due to the plans of major US technology companies to launch mass payment solutions based on dollar stablecoins. At the Eurogroup meeting, Gramegna revealed that the success of such stablecoins could threaten the monetary sovereignty and financial stability of the euro area. Therefore, the ECB and ESM urged the accelerated development of the digital euro as a strategic measure to deal with this competition.

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US and Europe’s divergent views

Piero Cipollone, an ECB official, stated in an interview in early February that the Trump administration’s support for stablecoins is likely to accelerate legislation around the digital euro. This is considered a necessary alternative to reduce reliance on US-backed stablecoins.

Cipollone added that the US and European views on stablecoins are very different, with the US seeing them as a tool to strengthen the global presence of the US dollar. Meanwhile, the ECB is concerned that reliance on US-backed stablecoins could weaken the euro. Therefore, the ESM’s support of the ECB’s digital euro project and the European Commission’s efforts to revise the MiCA (Markets in Crypto Assets) directive are crucial.

Integration of Stablecoins in Traditional Finance

Christopher Waller, Governor of the Federal Reserve, recently stated that stablecoins could enhance the global role of the US dollar. Jerome Powell, Chairman of the Federal Reserve, has also supported the regulation of stablecoins to strengthen their role in financial markets. New rules now allow US banks to offer stablecoin services, signaling further integration of stablecoins into traditional finance (TradFi).

Reports suggest that Bank of America (BoA) is exploring the launch of its own stablecoin, while Circle CEO Jeremy Allaire is pushing for mandatory registration for stablecoin issuers in the US. This suggests that US-backed stablecoins could accelerate their dominance in global transactions, which in turn could limit the influence of the euro.

Conclusion

With the US government’s increasing support for stablecoins, it is important for Europe to accelerate the development and implementation of the digital euro. This move will not only secure Europe’s monetary sovereignty but also ensure that Europe is less dependent on financial solutions dominated by the US.

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Reference

• BeInCrypto. EU Stablecoin Concerns US Euro Stability. Accessed on March 13, 2025
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